Regulatory Alerts2014-06-03
Proposed Changes to Module PCD Chapter 4 concerning Special Purpose Vehicles and Shari’a Compliance for Islamic Retail Banks
The Central Bank of Bahrain proposes amendments to Module PCD Chapter 4 requiring Islamic retail banks to secure Shari’a Supervisory Board approval prior to establishing or utilizing Special Purpose Vehicles. The updated framework restricts SPVs from obtaining conventional financing without prior Shari’a consent and mandates the replacement of existing conventional borrowings with Islamic financing within twelve months. Furthermore, banks must submit quarterly management accounts and annual audited financial statements for consolidated SPVs while obtaining prior regulatory approval for any material changes to capital, ownership, or control.
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